Lyn Allison (Victoria, Australian Democrats) Share this | Hansard source

The Treasurer told the parliament on Tuesday night that tax breaks would carry Australia into the next decade. The Democrats are not convinced, and that is what I want to talk about tonight. In our view, the Treasurer’s budget comes from a vision of Australia seen through the eyes of political strategists who cannot and do not see beyond the next election. This budget is about votes and not about nation building. In fact, there is very little by way of planning in this budget for those who are not couples with one or two high incomes, with 2.5 children at school or those not 60 and over with a generous nest egg on which to retire. This budget has been prepared with little interest in fact in the social, economic and environmental mess that is being left behind for the next generation of Australians.

First, let us acknowledge that the coffers are full. The government will spend nearly $217 billion next year and still have $10 billion left over. Or will it? Treasury projected a surplus for 2005-06 of $11 billion, but it was $8.4 billion out and it still has not explained where it went wrong. The Treasurer tells us that he has $8 billion a year more to spend because he is no longer paying interest on the debt that was there before he sold Telstra and before funding to universities and the ABC was so savagely cut. The remainder of Telstra will net another $25 billion; Medibank and the Snowy Hydro will net a few billion more. Those moneys are destined for the Future Fund, where we hope it will earn as much as those entities once earned in profits.

Australia is the lucky country right now. Jobs are up, wages are up, China is buying our coal and income from the mining sector—from selling off our mineral wealth—is putting $30 billion more into Treasury than it did in 1996. We are riding the greatest commodities boom and the fastest global growth in our history. Sales of iron ore, zinc, aluminium and copper are the highest ever. The economy is slowing now, but after 15 years of sustained growth. Access Economics say revenue is $34 billion higher than it was projected to be just four years ago.

But there is another side of the story. Manufacturing cannot compete against cheap imports and its share of the value adding industry declined from 15 per cent to 12 per cent over the Howard decade. The annual trade deficit was $24.8 billion in March this year, and it is climbing. Altogether, Australia owes more than $450 billion in foreign debt, and that is a lot higher than the $193 billion in 1996 that the Treasurer relied upon so heavily to paint the opposition as economic mismanagers. Ordinary homeowners are juggling the mortgage and child care, and motorists—particularly those stuck with gas guzzlers—are paying 25c more a litre than they were only 12 months ago. The ABS says bankruptcies are at their highest level since 2001, and mortgage repayment levels are at an all time low. Household debt increased by a colossal 221 per cent to $927 billion over the last decade, and average household debts rose 174 per cent. Interest rates are now 5.75 per cent and about $11 in every $100 in income is now being used to pay back interest on debt. That is up from $7 in 1996.

Since 1996 the median price of established houses in capital cities has risen 144 per cent. These are figures to be reckoned with, but you will not read about them in this budget, and that is why Peter Costello is spending $6.9 billion a year on tax cuts and giving half a million more families family tax benefits. He knows now that it is a battle to keep your head above water and he needs to be seen to be doing something to help. Of course, if you are a family on an income of $20,000 or $30,000, the handouts probably will not even match your higher petrol costs.

There will be $248 million spent on large families of three children—an extra $5 a week as an incentive to have a third child. There is $1.5 billion a year extra on defence and security. There are business tax cuts and a massive $6.2 billion to make superannuation tax-free for over 60-year-olds. All in all, the government is spending $13.7 billion more next year than it did this year. As most householders know, the secret of long-term sustainability is not spending like a kid in a lolly shop when you get a windfall—in this case a $16 billion surplus—but spending the money carefully and in a planned fashion. That surplus should have been invested in the future beyond the current economic boom, a future in which our children will not have to fix the problems that we left behind, like foreign debt, the HECS debt, climate change and water and skills shortages.

The Treasurer uses the term ‘nation building’ very loosely. I suggest he is spending our future now and leaving little for up-and-coming generations. This is actually a budget about the future of the coalition—for buying votes; not for the long-term future of a nation. The Democrats said early childhood development, climate change, water, oil, mental health, education and training, Indigenous inequality, infrastructure, research and development and tax reform should be the priorities of government but few if any made it into this budget.

Child care turned out not to be the priority that the Treasurer suggested, despite hints that it might be and it remains inaccessible and too expensive for a lot of families. Costs rose by 60 per cent in the last four years, but the child-care benefit has barely changed. In the last budget the government tossed parents a 30 per cent child-care rebate. Of course, this rebate will take up to two years to come through, after families have paid out the cash. So why did the Treasurer, who bragged about this being such a family and women-friendly budget, not just fold the rebate into the benefit and pay it to families when they need it?

This government’s great obsession with the private sector and competition has allowed a duopoly of for-profit centres with their economies of scale and scrooge-like control over costs, particularly wages, to take over the delivery of most child care. Community based centres where parents have a say in the management and where quality is what matters are closing and the waiting lists are growing. But Mr Costello, this is not about child-care places. Parents want skilled, well qualified staff and they want quality—something this budget does not deliver.

More than one-quarter of a million children below the age of six attend long day care but not all of them are receiving formal preschool once they turn four, and many other families cannot afford the fees that need to be charged for preschool. Since the Keating government removed preschool funding, the Commonwealth has contributed nothing to that vitally important first year of transition into school. For around $400 million a year this budget could have provided free preschool in child-care centres and in stand-alone kinders, but it has not. The thousands of new family day care places are good, but there are as many out there that have not been taken up. Treasurer, we still need to see a complete overhaul of the early childhood system, not your ad hoc bandaids. Early childhood education and care are essential in reducing poverty, and progress here would have been a very good step in nation building.

The government has lost whatever environmental credentials it claimed over the last decade, ignoring its own powerful federal environment and heritage laws, undermining its renewable energy target, decimating the Australian Greenhouse Office, allowing the $400 million Greenhouse Gas Abatement Program to be dissipated over a decade, and letting the Natural Heritage Trust peter out after next year. The Democrats were proud to have been involved in improving, refining and indeed initiating many of these measures for the environment, and it is irksome to see them undermined, watered down or just ignored by a government arrogantly using its numbers in the Senate. The environment, I would suggest, was in far better hands when the Democrats held the balance of power.

Australia would have been well on the track of reducing its emissions through renewables had the promised greenhouse trigger been put into the environment laws. Instead we now have a minister for the environment who has become antagonistic to, rather than a champion of, renewable energy development. He tried to rob a three-turbine wind development in Western Australia of money under the remote power renewable energy program, another initiative of the Democrats. This tiny wind farm was proposed by members of the community in Denmark, but he stopped it as well as the Bald Hills proposal because of a handful of objectors.

Funding stops in this budget for CSIRO’s programs on improved water allocation and management, including irrigation, sustainable natural resource management, understanding and responding to climate change, sustainable marine fisheries, healthy coastal rivers, estuaries and coastal zones and the Australian wildlife hospitals. Funding stops after next year for the photovoltaic rebate, the Renewable Energy Commercialisation Program, protecting Australia’s biodiversity hotspots, the regional national heritage program, the Renewable Energy Equity Fund and the Alternative Fuel Conversion Program—all of them gone. This budget pays lip service to alternative and renewable transport fuel despite rocketing petrol prices. Nothing has been done to reduce our consumption of or reliance on oil and yet there were so many opportunities. The $4 billion Automotive Competitiveness and Investment Scheme and the $52.5 million in this budget to prop up Ford’s new pickup trucks could have been used to leverage fuel efficiency and provide incentives to make hybrid vehicles in this country.

The government claims that public transport is a state responsibility but the Whitlam, Fraser, Hawke and Keating governments all provided public transport funds. You cannot have a national approach to transport, as AusLink claims, and ignore public transport. Our cities are congested with passenger cars and trucks, noise and pollution. Sitting back, funding more freeways, does not work, is not sustainable, uses up more oil and most definitely is not nation building.

So where is the plan to shift freight from road to rail along the east coast? This budget provides massive upgrades for the Hume and Bruce highways but where is the $3 billion recommended by the Neville committee back in 1998 to straighten and strengthen existing interstate main lines? The $270 million allocated in this budget is pitifully small and a fraction of what needs to be spent on rail.

The Democrats welcome the $500 million for the Murray-Darling Basin Commission but, again, it is not enough. It may improve water quality but it is unlikely to deliver water in anything like the quantity—1,500 gigalitres—that scientists say is so desperately needed to restore the system. There are two main ways to deliver more water to the Murray-Darling. The first is to purchase existing water entitlements or engage in entitlements buyback schemes, and the second is to reduce the huge losses in seepage and evaporation from irrigation channels. $500 million over five years will not go very far in doing either of those. The fact that the government is selling its $1 billion share of the Snowy Mountains Hydro Scheme and losing control of billions of litres of water flows makes a mockery of this gesture. Mr Costello, this is neither visionary nor generous. As droughts still rack much of New South Wales and south-west Queensland, it is astounding that the government has not set aside funds to help these states with effluent treatment and reuse, stormwater harvesting and, in the cities, household incentives to collect, reuse and save water.

Infrastructure investment underpins economic activity in telecommunications, transport, education, health, water and power generation. Australia needs adventurous, forward-looking infrastructure plans which are designed for sustainable communities, the environment and economies 15 years ahead. But there are no such plans in this budget.

Eight out of 10 Australian companies say that building the skills base is the key to international competitiveness. There is a pitiful $6 million for the National Skills Shortage Strategy, which says a lot about the government’s priorities or lack of them. Investing in people and their education, leaving aside all of those other benefits, increases productivity and economic wellbeing, but no budget in recent history has had less of a focus on the university and TAFE sectors. It makes no sense for a government to let our knowledge and applied skills sector fall into such a deplorable state. The ‘voluntary student unionism transition fund’—so-called—has not even been extended to student advocacy or health. The $10 million over four years for small businesses to set up shop on campuses is, frankly, laughable. Increases in the FEE HELP will mean more student debt. Australians now owe more than $11 billion in HECS, and we are burdening generations with personal debt that the majority will never be able to repay.

TAFE funding is still not indexed and the sector cannot seriously address the skills shortages, especially in our ailing manufacturing sector. Australia is the seventh lowest amongst the 25 richest OECD countries in VET funding. Three hundred thousand long-term unemployed cannot access the training and support needed to get them back into the workforce. Where is the concerted effort to improve the employment chances for mature aged workers, for the long-term unemployed and for upskilling existing workers? In fact the government actually cut the Basic Information Technology Enabling Skills for Older Workers program, the Career Planning program and the Women in Non-Traditional Occupations incentive. The Democrats again call on the government in this budget to increase funding to public schools to at least the average for the OECD nations. Schools also need extra funding for remoteness, students with disabilities, learning difficulties and challenging behaviours, and for Indigenous students and those from low-income families. I put it to the government that its failure to properly fund our education sectors is an act of vandalism which will eat at the productive heart of the nation.

I now turn to a core value of the coalition—income tax cuts. I understand that Australians will be grateful for tax relief in the budget but they will surely be disappointed that there is no strategic income tax reform plan. The Democrats and economics commentators say that structural tax reform is essential to a simpler, fairer and more transparent system. But Mr Costello is the ‘no plan tax man’. He has only adjusted rates and thresholds within the existing system—something a well-programmed computer could do with ease. The GST and the New Tax System took several years of hard work to develop, and so it is with income tax reform.

We say—and we have been saying this for many years—that a structural tax reform plan must include raising the tax free threshold so, at the very least, people with income below the poverty line do not pay tax. Indexing the rates to account for bracket creep is necessary, as are broadening the tax base by eliminating inequitable, inefficient and out-dated tax concessions, and reforming the tax welfare intersects to encourage people to move from welfare to work. If concessions were rationalised we could perhaps eliminate the need for tax returns—it is just an idea. Why do we need to do this? It is because effective marginal tax rates of up to 70 per cent apply to low-income earners right now when they move from welfare to work, and this is just unfair. No Australian should have to accept an effective marginal tax rate greater—much greater—than the new top rate of 45 per cent. The ‘no plan tax man’, in his largesse has just fiddled at the edges, rewarding those on the highest incomes the most.

The government’s bolt from the blue—to take tax off superannuation payouts—is perhaps the most blatant vote-buying measure that we have seen in this budget and it is most likely to advantage only the baby boomers due for retirement soon. Our guess is that this policy will become unsustainable and the claw-back will start sometime down the track and it will not be that far away. Removing tax is not simplification: it is a gift, benefiting those who least need it. We would like to make a suggestion on superannuation. Why not tax contributions going in progressively so that those on the 15 per cent tax rate would pay no super contribution tax at all; those on 30 per cent would pay 15 per cent; and those on 40 per cent would pay 25 per cent tax on contributions; and those on 45 per cent would pay 30 per cent tax on contributions?

We also think that lump sum payments should be very much discouraged. Retirement money is much safer in super funds than at the hands of investment shysters. These are just our thoughts and, like tax reform, they need more work to get them right—work to make sure that the tax system is sustainable, fair and equitable.

The $1.9 billion promised by the government in the wake of the Senate inquiry into mental health is indeed welcome and will go some way to alleviating the problem, but it is still about one-third of the increase that the committee was told was the minimum required to deliver mental health services to those who need them. We urge the government to take all the recommendations of this inquiry to the COAG meeting in June and to negotiate in good faith with the states to see that they are properly funded. There are no quick fixes in mental health, but we must work at alleviating the pain and the alienation of almost one million Australians affected by mental illness. The government must, together with the states, commit to funding well-staffed community based mental health centres and prevention and early intervention, to name just a few measures.

There is nothing in the health budget to drive down the rate of smoking—the addiction that still kills 19,000 people a year and is absolutely preventable. Minister Abbott’s school canteen guidelines will not solve the looming wave of obesity related disease. There is again nothing to bring down the dental waiting lists or to stop the onslaught of sexually transmitted infection. The Treasurer’s generosity has not been extended to the PBS, where there is enormous pressure right now to reduce costs, at the risk of making some medicines unavailable in this country.

It is clear that the Howard government is cynically failing Indigenous Australians. Here is an example: DEST’s Abstudy for the next four years has tied attendance to payments. They have revised their figures downwards by $1.8 million in the expectation that Indigenous people will not attend schools. Leaving aside the unlikelihood that the government can predict the future actions of people, this is a cynical and cold-hearted cost-cutting exercise. Fewer than one-fifth of Indigenous people over 15 go on to year 12. Not surprisingly, they have much lower rates of tertiary education, and unemployment for them is almost three times higher than for non-Indigenous people. They earn much less and are more likely to live in substandard conditions. The gross overcrowding in Indigenous communities would never be tolerated elsewhere.

Indigenous community housing organisations across Australia need at least a further $141 million a year for five years to fix the Indigenous housing shortfall. Indigenous people are more likely to have inadequate water and washing facilities and poor sanitation and sewerage. The AMA says that Indigenous health is underfunded by at least $452.5 million every year, and an additional $50 million is needed for the Indigenous workforce to be trained. But none of this is in the budget, and I doubt Indigenous Australians will welcome another 10 years of Mr Costello’s economic reforms. Mutual obligation has not worked for them so far, any more than practical reconciliation did.

Those on benefits will, like the rest of us, soon have to pay for the highly elaborate infrastructure being set up around an ID card, which will track their welfare payments, wiping out, we are told, welfare fraud to the tune of $3 billion. We think this is doubtful, judging by the harshness with which Centrelink already treats its clients.

The Treasurer argues that helping families is one of the government’s highest priorities and that this budget delivers through tax cuts and the family tax benefit. I am sure that families will welcome the additional income, but they will do so knowing they will also have less job security, greater casualisation and less job flexibility, thanks to the government’s Work Choices.

The Treasurer wants women to have more children, but they know, as I do, that it costs more than $5 extra a week to raise a child. They also know that they will need at least one good, stable income in a family before they take that step. Work Choices attacks secure family incomes. It delivers job insecurity and uncertain wages and conditions. Work Choices will likely drive down the minimum wage and reduce rights and benefits, especially for the vulnerable, the disadvantaged and women who are in and out of the workforce because of their caring responsibilities.

In this law, the government has failed families and failed Australia. We have not heard much about intergenerational equity in this budget because, frankly, there is none. The current generation of students and children—our next generation of workers and parents and custodians of the economy and the environment—are not considered much in this budget and the government is leaving them the most difficult problems to solve.

Mr Howard and Mr Costello’s political strategists have sacrificed the great tenets of liberalism—freedom, investment in people and investment in the future—for a good headline. The Democrats are committed to what we know to be the priorities for a sustainable future for all Australians, well beyond a Costello next decade and most definitely beyond the next election.